What is the deadline for a credit card company to collect on bad debt? Under Kentucky law, that depends on where the credit card contract was entered. Most credit card companies take the position that the law of the processing center, or the financial services company’s home office, controls the credit card contract.
And in many of those states, the statute of limitations to sue on a written contract, like a credit card agreement, is as low as four or five years. That is far less than Kentucky’s fifteen-year statute of limitations. Moreover, under Kentucky’s “borrowing statute,” a shorter limitations period likely applies. No state, besides Kentucky, has a statute that exceeds ten years. In fact, only 5 states (Montana, Wyoming, Iowa, West Virginia, and Rhode Island) have limitations periods greater than 7 years.
This means that many (and possibly most) credit card collection cases pending in Kentucky courts are barred by the applicable statute of limitations. But because many people do not hire lawyers to defend these cases (or worse, credit card companies are allowed to obtain default judgments through “warning order attorneys,” without even trying to serve the owner of the credit card), the statute of limitations defense never gets raised.
Don’t assume that you have no defenses to a credit card collection case. If you have received a collection letter on an old credit card, call us to ensure that you raise all available defenses.